According to Bloomberg , some of the biggest studios include Warner Bros., owned by Time Warner TWX , and Universal Pictures, which is owned by Comcast. The Walt Disney Company DIS is one of the only leading movie studios not interested in such a deal because of its plan to release its own streaming service in 2019.
Terms of the deals vary between studios as each are negotiating separately. One potential deal could see a digital release date of about 17 days after debut for $50, while another deal could involve a release date of four to six weeks after debut for $30.
Movie studios are eager for a deal with Apple and Comcast to offset declining DVD sales. In the first half of 2017, DVD sales were down 10% according to the industry-backed researcher DEG.
The studios have also discussed splitting revenue made from premium video on demand with cinema chains if they agree to the deal. However, theater companies have asked for a long-term commitment as long as 10 years for a revenue split, which the studios have rejected.
As a result, if movie theaters do not agree to terms that the studios like, the movie studios could progress without giving theaters anything.
Further Trouble for Movie Theater Chain Stocks
This news has caused movie theater stocks to fall in midday trading on Friday. Shares of AMC Entertainment Holdings Inc. AMC and Regal Entertainment Group RGC have fallen 5%, while Cinemark Holdings CNK stock is down 2%.
However, this is far from the only news hurting movie theaters this month. Early in August, AMC released poor second quarter fiscal 2017 earnings, reporting an earnings loss of $1.33 per share. Since then, AMC has fallen from $20.80 per share to $13.10 as of yesterday's close.
These poor results are a part of an industry trend. AMC reported that U.S. box office revenue dropped 4.4% year-over-year. Additionally, the Motion Picture Association of America has reported that frequent moviegoers dropped by almost 2 million from 2012 to 2016 (also read: Did AMC Just Warn Us That Movie Theaters Are Dead? ).
Additionally, MoviePass, a movie ticket subscription service, announced this week that it will lower its monthly fee to $9.95 a month. This would allow subscribers to see unlimited movies for about the same cost as a Netflix NFLX subscription.
In reaction, AMC is seeking to legally block MoviePass from offering its service to AMC's 600 theaters because the program's pricing is "unsustainable." AMC said MoviePass could not pay theaters full ticket price with the discount if subscribers see more than one movie a month because the company has "not yet known how to turn lead into gold."
However, MoviePass maintains that its recent sale of a majority stake to Helios and Matheson Analytics Inc. HMNY allows it to lower its subscription fees. "There must be some way to make us whole," said MoviePass CEO Mitch Lowe, a co-founder of Netflix. "We can work together with them in a constructive manner so that everybody makes more money."
Whether AMC can win this fight is yet to be seen. Either way, AMC and other cinema chains will need to grapple with lower turnout while streaming services continue to expand. The potential deals between movie studios and Apple and Comcast could close as early as next year.
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